Accelerating Multi-Unit Expansion
Metro Dentalcare is a multi-unit dental practice management company located in the Minneapolis/St. Paul market. Its clinics and affiliated dentists offer general, orthodontic, and specialty dental care. At the time of our investment, Metro Dentalcare provided business and administrative support to 23 clinics, which offered a range of state-of-the-art preventive, restorative, pediatric, and cosmetic dental services to more than 125,000 patients annually. Its strong brand name and reputation for delivering high-quality dental services made Metro Dentalcare a preferred service provider for many of the largest employers in Minnesota.
Background
Dr. David Milbrath founded Metro Dentalcare in 1968 as a single-location dental practice. Together with his partner Dr. Marcus Gustafson, they grew through de novo clinic openings and acquisitions of small dental practices. By 1995, Metro Dentalcare was operating nine clinics, all in Minneapolis/St. Paul. In June 1995, Metro Dentalcare merged with seven dental centers owned by Delta Dental of Minnesota, one of the largest dental insurance providers in the United States. The two dentists and Delta Dental became 50/50 owners of Metro Dentalcare. After the merger, Metro Dentalcare continued to open new units and, 10 years later, operated 23 clinics.
In 2005, Delta made a strategic decision to exit the business of providing dental services and permitted Drs. Milbrath and Gustafson to find a new partner.
Opportunity
To partner with an exceptional management team and accelerate Metro Dentalcare’s growth through acquisitions and de novo clinic openings, further establishing the business as the clear market leader in the Minneapolis/ St. Paul market
Accomplishments
Structured Transaction to Position Metro Dentalcare for Growth: Sentinel overcapitalized the business so that Metro Dentalcare had the flexibility to accelerate its growth via acquisitions and de novo clinic openings.
Supported a More Aggressive Growth Strategy: We helped management develop a plan to accelerate the buildout of new clinics and the pace of acquiring independent practices in the Twin Cities.
Strengthened Metro Dentalcare’s Capabilities: Sentinel supported management as they developed the back office infrastructure and brought in additional talent. Metro Dentalcare also acquired a dental lab, which reduced costs and enhanced its full-service offering.
Outcome
In less than three years, Metro Dentalcare had opened or acquired 12 new clinics at the rate of approximately five per year, much faster than the two-per-year pace under prior ownership. With 34 clinics, Metro Dentalcare’s profitability more than doubled, and it reached a scale attractive to large strategic buyers.
In 2007, having successfully accomplished our investment objectives, Metro Dentalcare was sold to publicly traded strategic buyer American Dental Partners (NASDAQ:ADPI) in a highly successful transaction for Sentinel and its management partners.
Case studies have been selected for illustrative purposes for management teams of midmarket companies considering a partnership with Sentinel and should not be considered an offer or solicitation of services or an actual or implied endorsement of Sentinel or any security, investment, or portfolio company. The portfolio companies highlighted are not representative of all current and prior investments of Sentinel. A list and description of investments since Sentinel’s inception is available on this website.